Nebraska Depository Inst. Guar. Corp. v. Stastny, S-89-1420

• Decision Date: 26 March 1993
• Docket Number: No. S-89-1420,S-89-1420
• Parties: NEBRASKA DEPOSITORY INSTITUTION GUARANTY CORPORATION, a Nebraska Corporation, Appellee, v. Francis L. STASTNY et al., Defendants and Third-Party Plaintiffs, Appellants and Cross-Appellees, The Hartford Accident and Indemnity Company and State of Nebraska, Department of Banking, Third-Party Defendants, Appellees, and First State Bank of Dwight, Third-Party Defendant, Appellee and Cross-Appellant.
• Court: Nebraska Supreme Court

Page 657

497 N.W.2d 657

243 Neb. 36

NEBRASKA DEPOSITORY INSTITUTION GUARANTY CORPORATION, a Nebraska Corporation, Appellee, v. Francis L. STASTNY et al., Defendants and Third-Party Plaintiffs, Appellants and Cross-Appellees, The Hartford Accident and Indemnity Company and State of Nebraska, Department of Banking, Third-Party Defendants, Appellees, and First State Bank of Dwight, Third-Party Defendant, Appellee and Cross-Appellant.

No. S-89-1420.

Supreme Court of Nebraska.

March 26, 1993.

Syllabus by the Court

1. Actions: Parties: Standing. In determining if a party is a real party in interest, the focus of the inquiry is whether the party has standing to sue because the party has some real interest in the cause of action, or a legal or equitable right, title, or interest in the subject matter of the controversy. The purpose of the inquiry is to determine whether the party has a legally protectable interest or right in the controversy that would benefit by the relief to be granted.

2. Jury Instructions. When it becomes necessary for the court to give further instruction to the jury while it is deliberating, the proper practice is to call the jury into open court and to give any additional instructions in writing in the presence of the parties or their counsel.

3. Jury Instructions. A party's right to a fair trial may be substantially impaired by jury instructions that contain incorrect information, suggest an improper shift of the burden of proof, misstate the law upon a vital issue, improperly single out or give undue prominence to particular evidence or facts, contain inconsistencies, or confuse or mislead the jury.

4. Jury Instructions: Appeal and Error. All jury instructions given must be read together, and if, taken as a whole, they correctly state the law, are not misleading, and adequately cover the issues supported by pleadings and evidence, there is no prejudicial error necessitating a reversal.

5. Jury Instructions: Appeal and Error. The refusal to give proper requested instructions, which are not covered by other instructions which are given, is error.

6. Jury Instructions. Notwithstanding an absence of a request for a specific instruction, a trial court must instruct the jury on material or relevant issues presented by the pleadings and supported by the evidence.

7. Contracts. When a contract is ambiguous, the court may consider all facts and circumstances leading up to the contract's execution, the nature and situation of the subject matter, and the apparent purpose of the contract.

8. Contracts: Evidence. In interpreting a written contract, the meaning of which is in doubt and dispute, evidence of prior or contemporaneous negotiations or understandings is admissible to discover the meaning which each party had reason to know would be given to the words by the other party.

9. Trial: Witnesses. It is within the discretion of the trial court to permit subsequent examination of a witness after direct and cross-examination.

10. Trial: Expert Witnesses. Admissibility of expert testimony depends on whether specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue. It is for the trial court to make the initial decision on whether the testimony will assist the trier of fact. The soundness of its determination depends upon the qualifications of the witness, the nature of the issue on which the opinion is sought, the foundation laid, and the particular facts of the case.

11. Trial: Expert Witnesses. Expert testimony as to the custom and practice of an industry is admissible to elucidate the meaning of ambiguous language.

12. Contracts: Intent: Expert Witnesses. When a contract term is not defined in the parties' contract, and the parties dispute the intended meaning of the term, an expert witness may properly testify as to the expert's interpretation of the contract language.

13. Directed Verdict. The party against whom a judgment is sought under a directed verdict is entitled to have all relevant evidence accepted or treated as true, every controverted fact as favorably resolved, and every beneficial inference as reasonably deducible from the evidence. If there is any evidence in favor of the party against whom the motion is made, the case may not be decided as a matter of law.

14. Directed Verdict. A trial court should direct a verdict as a matter of law only when the facts are conceded, undisputed, or such that reasonable minds can draw but one conclusion therefrom.

George H. Moyer, Jr., of Moyer, Moyer, Egley, Fullner & Warnemunde, Madison, for appellants.

Thomas M. Locher and Kevin J. Dostal, of Hansen, Engles & Locher, P.C., Omaha, for appellee First State Bank of Dwight.

HASTINGS, C.J., and BOSLAUGH, WHITE, SHANAHAN, GRANT, and FAHRNBRUCH, JJ.

WHITE, Justice.

In December 1982, the Dwight Cooperative Credit Association (Association), facing insolvency, merged with the Farmer's State Bank of Dwight, now known as the First State Bank of Dwight (Bank), the third-party codefendant and sole appellee involved in this appeal. To keep the Association operating during 1982, the Nebraska Depository Institution Guaranty Corporation (NDIGC) had deposited a total of $210,000 in a correspondent bank to the credit of the Association. The $210,000 was made available through two promissory notes signed by the third-party plaintiffs-appellants.

The appellants are 12 individuals who were formerly directors, officers, or members of the supervisory committee, membership committee, or the loan committee of the Association. Originally, Raymond Sisel was a third-party plaintiff to this action, but he passed away while the case was at trial and the action was not revived as to him.

After the merger between the Association and the Bank, the promissory notes were not repaid. The NDIGC filed suit against appellants as makers of the notes. Appellants in turn filed third-party claims against (1) the Bank, based on a breach of the merger agreement; (2) the Hartford Accident and Indemnity Company, as the insurer of a fidelity bond on an employee who had embezzled from the Association; and (3) the State of Nebraska, Department of Banking (department), as receiver of the Association's assets and as successor in interest for the NDIGC. The third-party suit against the Bank was severed from the other actions, and a compromise and settlement was reached among the other parties in February 1986. As part of the compromise and settlement, appellants agreed to pay $90,000 in full and complete satisfaction of all sums due to the NDIGC arising from the execution of the two promissory notes. As a result of the settlement, both the department and the Hartford Accident and Indemnity Company were either released from or satisfied all claims asserted by appellants. Consequently, the NDIGC, the Hartford Accident and Indemnity Company, and the department were dismissed as parties to the suit. Appellants then sought to recover the $90,000 as damages arising from their claim against the Bank. This claim was based on the Bank's alleged breach of a promise in the merger agreement to assume appellants' liability arising from the notes.

After a jury trial, the appellants' breach of contract action against the Bank was dismissed. Appellants now appeal the dismissal of their action. The Bank cross-appeals, asserting that it was error for the lower court to overrule the Bank's motion for a directed verdict.

A brief review of the function and organization of the Association, as distinguished from a traditional bank, is in order. The Nebraska Department of Banking approved the articles of association for the Association in June 1934. The Association was capitalized by a $10 membership fee from each depositor or borrower in addition to an "open share" account that was made up of 10 percent of all members' deposits. Withdrawal from these open share accounts could be restricted by either the Association's board of directors or by an order of the department to protect the interests of the other shareholders.

Amended bylaws approved in 1945 provided, in pertinent part, that "losses incurred by the association should be charged to the guaranty fund, after the board of directors and the supervisory committee jointly determine that a loan or account is uncollectible and that a loss has been incurred, or if so ordered by the department of banking" (article XVI, § 2), and that "[t]here shall be no liability of the members for the debts and obligations of the association" (article XVIII, § I).

Department regulations prohibited cooperative credit associations from carrying overdrafts on depositors' accounts. Therefore, under the recommendation of the department, a depository account was set up in the mid-1970's. This account was funded by a note given by the Association's directors to permit the Association to cover occasional overdrafts arising in the normal course of business. This liability account was known as the "DH Special Account" and commonly referred to as the "director's account." The liability was carried on the Association books as a demand deposit account but did not appear on the Association's daily financial statement.

The events leading up to the present lawsuit generally cover a period of 12 months beginning in December 1981. At that time, depositors at the Association complained to the department that they were not receiving their monthly statements. In late January or early February 1982, the department undertook an examination of the Association's records and uncovered a system of embezzlement by an employee of the Association, Susan Urbanek. Urbanek, who is not a party to this action, acted as a combined assistant secretary-treasurer, teller, and bookkeeper.

To conceal her embezzlement, Urbanek removed the records of all depositors with overdrafts to her home. In addition to the fact that there were missing and presumably embezzled funds, the department...